$1,230,000 of debt on a $190,000 household income. Until this year, that ratio was a conversation between you and your lender's calculator. Since 1 February 2026 it has a regulator watching it: APRA's first-ever debt-to-income cap is live, and no more than 20% of each lender's new home loans can go to borrowers owing six times their income or more.
The APRA DTI limit doesn't ban high-DTI home loans in 2026. It rations them. And the exemption for construction loans and new builds is the way through that most of the commentary has missed.
The timing matters. The RBA cash rate sits at 4.35% after three hikes across February, March and May 2026, with the next decision due on Tuesday 11 August 2026. One big-four bank tips two more rises; the other three reckon the peak is in. Cotality's June 2026 figures show national values slipping 0.4% for the month and auction clearance rates stuck in the low 40s. Rising rates thin out the competition at open homes. For a prepared borrower, that's not a threat. It's a window.
What did APRA change on 1 February 2026?
Your debt-to-income ratio is your total debt divided by your gross household income. Owe $1.2 million on $200,000? DTI 6.0. For the full mechanics of how lenders build that number and what they count as debt, see our guide to debt-to-income ratios.
The new rule is a flow cap on lenders, not a hard line on borrowers. From 1 February 2026, each lender can write no more than 20% of its new owner-occupier and investor loans to borrowers with a DTI of six or higher. APRA has held this power for years without touching it; the 3% serviceability buffer, reconfirmed at APRA's 28 May 2026 review, did the heavy lifting on its own until now. This is the first time the DTI lever has been pulled in Australia.
The cap also has carve-outs, and they are where the strategy lives:
| Loan type | Treatment under the 1 February 2026 cap |
|---|---|
| Established property, owner-occupier | Counted toward the lender's 20% high-DTI quota |
| Established property, investor | Counted toward the same quota |
| Construction loans | Exempt |
| New builds, including off-the-plan and house-and-land | Exempt |
| Any loan with a DTI under 6.0 | Outside the cap; normal serviceability applies |
Below six times income, nothing changes for you. Above it, you're now competing for a limited slice of each lender's monthly book.
Will the 20% DTI cap stop you borrowing?
A cap on the bank is not a cap on you. It's a queue.
Lenders now manage high-DTI lending as a quota, and when something is rationed, the rationer chooses. Clean payslips, a solid deposit and a simple file get picked first; the complicated file waits, or misses out. We've watched quota-style rules play out before: no lender announces it's full. The high-DTI application just moves slower, cops a sharper assessment, or comes back declined with a one-line reason attached.
Follow that through. The cap forces lenders to ration. Rationing means the identical application can get a yes at one lender and a no at another, and a different answer at the same lender two months later. The useful question is no longer "how much can I borrow?" but "which lender has both the appetite and the quota headroom for my file right now?" That second question is what the Wity Borrowing Power Assessment answers: it models your capacity across 45+ lenders, not one bank's calculator. When your DTI hovers near six, the spread between the most and least generous assessment can run to six figures. Our borrowing capacity guide breaks down what drives that spread.
Refinancers, this includes you. You're free to leave your current lender whenever you like; the barrier has only ever been passing the new lender's assessment, and a DTI above six just made that assessment more selective. If a refinance application has been declined since February, the cap may be the reason, and a lender with quota headroom may answer differently.
Why is the new-build exemption the real story?
Construction loans and brand-new dwellings sit outside the cap entirely. APRA's logic is supply: choking finance for new housing would deepen the shortage these rules are partly responding to.
Now stack the tax change on top. The 12 May 2026 federal budget, since legislated, quarantines negative gearing on established properties: for established homes bought after 7:30pm AEST on 12 May 2026, rental losses can no longer offset wages from 1 July 2027. They stay deductible against residential property income, including gains, and carry forward until used, but the wage offset is gone. New builds keep the full deduction, and negative gearing on existing holdings is grandfathered.
Two separate arms of policy, prudential and tax, now point in the same direction. High-DTI investors get squeezed out of established purchases by the quota, and steered toward new builds by the deduction rules. Expect that to push more buyer demand at house-and-land packages and off-the-plan stock through 2026, while established high-DTI purchases queue for a shrinking share of lender appetite.
The upshot: if your DTI sits near six, price an established option against a new-build option before you commit to either. Construction lending runs on its own mechanics, progress payments and fixed-price contracts among them, so read our construction loans guide before you sign anything. Buying your first rental? Start with the first investment property guide.
What does six times income look like in real dollars?
Mel and Josh live in Everton Park, in Brisbane's north. Household income: $190,000. They owe $530,000 on their home and want an $875,000 investment property with a $700,000 loan.
Total debt: $1,230,000. DTI: 6.5. They're in the capped bucket. Same couple, two paths.
Path A, the established townhouse in Logan. Their file competes for quota. A lender with headroom might approve it; a lender near its 20% might decline or sit on it. The fallback is shrinking the new loan to $610,000, which brings total debt to $1,140,000 and their DTI to exactly 6.0, but cuts their purchase budget by roughly $90,000.
Path B, a new-build townhouse at the same $875,000. The loan is exempt from the cap and assessed on standard serviceability. Because it's a new build, the negative gearing deduction against their wages also survives the 12 May 2026 rules, where the established purchase would have its losses quarantined against property income only from 1 July 2027.
Same income. Same debt. Same price. One path queues for a quota spot; the other doesn't, and it keeps the tax deduction as well.
Based on typical scenarios. Individual outcomes vary.
What should you do before the 11 August RBA decision?
Three moves, in order:
- Know your number. Add up your debts, including the loan you want, and divide by gross household income. Above about 5.5, plan as if the cap applies to you; lenders typically hold their own margin under a regulatory limit.
- Shrink the numerator. Personal loans and car loans count toward total debt, and unused card limits drag on serviceability. Clearing a $20,000 car loan on a $190,000 income trims your DTI by roughly 0.1 on its own.
- Check the exempt lane. If a new build or construction loan fits your plans, it may sail through where an established purchase queues.
Rate rises since February have already trimmed borrowing power, and if Westpac's forecast of a 4.85% peak proves right, capacity tightens again before it loosens. The buyers who do well in this cycle are the ones whose finance is structured before the RBA turns and the crowd comes back.
Want to see which side of six you land on, and which lenders have room for your file? Start the Wity questionnaire → — free, no credit check, two minutes.